Malcolm Henry

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Financial Reform: An Alternative Use For “Yes”?

The Scottish independence referendum was about different things to different people, but a common theme was the hope of finding better ways of doing things: ways of tackling poverty and inequality; ways of moving government closer to communities, of making democracy more responsive; ways of encouraging an economy to thrive.

For many people who are disillusioned by the remote and alien workings of Westminster the primary reason for voting Yes was a belief that making these kinds of changes would only be possible in an independent Scotland.

As someone who’s an advocate of radical reform, but voted No in the referendum, I have been challenged to explain how we can make such changes from within the UK given the right-of-centre political climate south of the border in which the dreary weather of austerity and blaming the woes of the world on Europe seem to prevail.

It doesn’t matter much where we are, UK or independent Scotland, when it comes to the question of how to make radical reforms happen there are no easy answers, but let’s start with the experience of the Yes movement itself and see what we can learn.

What began as an official campaign led by established political operators quickly turned into a blossoming of political engagement the likes of which Scotland hasn’t seen in my lifetime. For every official meeting and press release there were thousands of self-directed conversations and social media posts in which every aspect of independence, the union, and how they affect our lives was researched, dissected and debated.

The numbers are striking: 97% of those eligible registered to vote in the referendum; 82% (of those eligible) cast their vote. Compare that to the 2010 UK and 2011 Scottish general elections where only 57% and 46% (of those eligible) took the opportunity to participate.

The difference in the level of engagement can, I think, be accounted for by the simplicity of the proposition. The question – “Should Scotland be an independent country?” – allowed everyone in. Each of us was able to bring our personal collection of important issues and pet policies to the debate and imagine how they could be resolved and implemented in an independent Scotland.

Contrast this with a general election where unpopular political parties try to woo us with a hundred vague promises, most of which are of limited appeal and probably won’t be kept if those doing the promising are voted into government.

In the end the independence proposition failed to gain support from 63% of those eligible to vote, but the UK political establishment got the fright of its life and now recognises that the appetite for change runs right through the Yes vote and deep into the No side of the electoral calculus.

What form this change should take is less clear and is in danger of becoming lost in the murky world of party politics. If this is allowed to happen the energy and enthusiasm that has been inspired by the independence debate will soon revert to cynicism and apathy, which would be a tragedy.

A simple question with a “yes” or “no” answer prompted record numbers of Scots to participate in a democratic process. So what if we pose a different question, one that can capture the imagination of 70% or 80% or 90% of the population of the whole of the UK?

Can we form a simple proposition that offers something more directly empowering than rearranging our government; something in which everyone can see the possibility for positive change? I believe that we can.

What is the common obstacle that prevents us from making the world a better place? The answer is money. It’s the limiting factor for every government, every business, every organisation, every individual who tries to make a difference. There’s just never enough of it available to do what we need to do.

We argue endlessly over how the limited supply of money should be spent but never stop to consider the reasons behind the shortage. Our failure to investigate and understand how money works means we fail to see that the lack of money is caused by flaws in our financial system.

The nature of these flaws – the reasons behind the lack of money for government spending, business investment, or lifting people out of poverty – aren’t difficult to grasp. They’re partly technical and partly psychological. Once we understand these reasons it becomes easy to see how we could make money work properly for everyone all of the time.

Most people in the UK are burdened with repaying debt, and millions of us are locked into surviving on inadequate welfare payments. Just about everyone is imprisoned, in one way or another, by our financial system for big chunks of their lives. Our shared experience means that financial reform is the cause around which all of us can rally. This common aspiration – to make money work properly – can carry a thousand different ideas along with it, all of which can be realised within a reformed financial system.

Financial reform can eliminate poverty and unsustainable debt. It can create a truly free labour market in which we all have the power to choose how, when and under what circumstances we go to work. It can provide interest-free cashflow funding to government and business. It can create a stable banking system and remove our reliance on financial markets. It will allow us to replace “stupid” taxes (VAT, NICs, CT) with “smart” ones (land value tax, carbon tax). Most importantly it will allow productive people to be productive and our communities to thrive.

The challenge is to nail down the best way to make money work for us and then communicate how it can be done. Key to this is framing a question that requests a mandate for financial reform, the answer to which is an irresistible “Yes”.

If we get it right then all political parties will have to climb aboard or be left floundering in the wake of the same force that drove the Yes Scotland campaign: a mass of determined people pulling in the same direction. If we get it right all of the things that we hoped could be delivered by Scottish independence will be possible, along with a great many other things that currently appear to be unattainable because they’re “unaffordable”.

The shift of focus away from the long-held dream of an independent Scotland might be difficult for some, but we’re unlikely to get another independence referendum within the next decade. In the meantime Scotland’s Yes voters could lead the way, channelling their new-found political energy into radical financial reforms that could transform the lives of everyone across the UK.

4 thoughts on “Financial Reform: An Alternative Use For “Yes”?”

What is question? is a very good question. There are several angles that could be taken and I’m not sure which would gain most traction.That’s why we need to debate it.

“Should money be nationalised?” might work after enough people find out that most of the money we use is created by private banks for their own enrichment.

But a general question like this would only work if there was a clear consensus as to how the nationalised money system would work. Otherwise we’d have the same problem as we had with the indyref – a policy vacuum surrounded by lots of noise, arm-waving and confusion.

I think the precise nature of the reforms would have to be agreed and understood in advance of the question being framed.

For example, if a version of my own proposals surfaced as the most agreeable option after some sort of financial reform convention then the question could be something like:

“Should we establish a Common Cashflow Fund as described in the Charter for Financial Reform 2016?”

I’m not sure I understand how to approach financial reform but do recognise that we need it. More importantly, we need to carry the growing realisation that power is something that should be vested in citizens and only ceded to higher authorities where absolutely necessary. This is a progression, from the individual to the local community to the borough, county, region, country and eventually the UN as appropriate. Money however undermines that fundamental tenet of democracy and means that the people who actually hold power are those who control the money and that is just not right. The question is how do we fix it?

For me the indyref was about taking all power back at least one level to Scotland and then deciding which powers we cede to higher authorities – for example ceding power over defence, foreign and monetary policy to a reformed union of British countries. Unfortunately the Yes campaign were not clear enough with this message – because that is what Salmond was actually saying publicly with his slightly confusing stance on monetary union, and we could have been sure that a defence union would have fallen out of the negotiations (Scotland has the only Faslane in the UK). Foreign & immigration policy would have been a no-brainer on the basis of a shared coastline and shared defence force. Now what is being discussed are proposals that look remarkably like what I have just described, the only difference is that power still resides with a higher authority who are daining to give some of it back down the tree towards the citizens. Whilst the outcome will be welcome, and probably agreeable to 80% of both Yes and No voters, the route to getting there leaves a bad taste.

So back to financial reform … and what does this mean? Access to capital is an essential ingredient to building a better society. It is the only escape route for those of low means, otherwise the rich get richer (because they can afford to develop) and the poor get exploited. The right to make profit from lending, however is dubious and incidentally banned under sharia law. So how can we provide access to capital, whilst avoiding institutions profiting from the provision? How do we manage risk so that bad debts (which will always arise as ventures fail) can be afforded? How do we fairly assess which projects can support borrowing and which can’t? How do we re-cycle accidental profits (i.e. the excess which would arise when bad debts are provided for but don’t materialise)? Would it be too radical to suggest that we do this through a state owned bank, which is obliged to lend (although not irresponsibly) and where any profits are re-cycled to citizens via the state ownership, with this bank being staffed by dedicated professionals, operating under a strict code of practice… or have i just described Lloyds BoS?

All good questions which would take up too much space to answer here, but one point that’s worth considering is access to capital.

We’ve got used to thinking of money as synonymous with capital. but it’s not. Money is merely the tool that we use to mobilise capital. The only capital that we have is human effort. Nothing of value to us can become valuable without somebody putting their brains and muscles to work.

Capitalists are able to exercise power over the rest of us only because we need money in order to survive. They use money to mobilise us to their advantage,

A guaranteed periodic distribution of money to everyone (e.g. universal basic income) is the best way that I can see to remove that leverage and democratise our economy.

UBI gives each of us the freedom to choose how and when we will sell our labour. We can choose to get involved with the capitalist’s project in return for extra income or we can choose to turn our hand to a not-for-profit project that serves some useful purpose that’s being neglected by “the market”.